Hernke v. Coronet Ins. Co.

• Decision Date: 07 April 1976
• Docket Number: No. 613,613
• Citation: 240 N.W.2d 382,72 Wis.2d 170
• Parties: Judith M. HERNKE and Ronald J. Hernke, Respondents, v. CORONET INSURANCE COMPANY, a Foreign Corporation, and Fred J. Eichler, Appellants. (1974).
• Court: Wisconsin Supreme Court

Page 382

240 N.W.2d 382

72 Wis.2d 170

Judith M. HERNKE and Ronald J. Hernke, Respondents, v. CORONET INSURANCE COMPANY, a Foreign Corporation, and Fred

J. Eichler, Appellants.

No. 613 (1974).

Supreme Court of Wisconsin.

Submitted March 4, 1976.

Decided April 7, 1976.

Robert J. Beaudry, West Allis, for appellants; Ronald J. Steinle, Jr., Cedarburg, of counsel.

Bittner, Petitjean & Hinkfuss, Green Bay, for respondents.

HANLEY, Justice.

Two issues are presented on this apeal:

1. May the issue of passive negligence be litigated in the circuit court proceeding?

2. Did the trial court err in precluding litigation on the issue of negligence causative of the collision?

Passive Negligence

At the outset, the differing language between the order of the trial court and its memorandum discussion must be noted. The order limited the issues at trial to those dealing with damages. The memorandum noted that there will be no issue of negligence with respect to the cause of the accident. Aggravation of injuries through passive negligence in not utilizing available seat belts is a triable issue, Bentzler v. Braun (1967), 34 Wis.2d 362, 149 N.W.2d 626. However, respondents concede that this issue of passive negligence is preserved in any case. It clearly was not involved in the litigation in the county court, and the trial court undoubtedly implied this preservation in its reference to negligence causative of the collision.

Active Negligence

Appellants Eichler and Coronet contend that the county court resolution of the negligence causative of the May 11, 1972 collision, in which judicial proceeding they participated as parties, cannot be held to resolve the same issue in the circuit court action to which they are also parties.

The trial court concluded that this case was governed by the decision in McCourt v. Algiers (1958), 4 Wis.2d 607, 91 N.W.2d 194. McCourt was injured in a collision between the car she was driving and a car driven by Algiers. She sued him and his insurer. Algiers denied negligence and interposed McCourt's own negligence in defense. A passenger in the McCourt vehicle meanwhile commenced suit in federal court against McCourt's insurer, Northwestern, claiming negligence in the operation of the McCourt vehicle. The insurer in turn brought in Algiers and his insurer for contribution, and they denied the claim. Algiers also counterclaimed for his own damages. A jury trial in the federal court resulted in a finding of causal negligence on the part of Algiers alone. McCourt in her state action contended the determination of the negligence issues in the federal forum were res judicata; but the trial court held otherwise, excluding evidence of the federal court action and submitting questions on negligence to the jury. The jury found that Algiers was not negligent and that McCourt was causally negligent in several respects. McCourt's motions after verdict were denied and judgment was entered on the verdict dismissing her complaint. On appeal this court reversed the trial court with directions to grant a new trial on the sole issue of McCourt's damages.

Objection is made that McCourt is authority contrary to the trial court's holding here. Appellants note that Mrs. Hernke was not a party to the county court action and argue that she cannot be considered privy to the interests of her husband. According to the Restatement of Judgments, a person who is not a party or privy to an action in which a valid judgment was rendered is neither bound by nor entitled to claim the benefits of such an adjudication upon any matter decided in the action. See Restatement of Judgments sec. 93(b) and illustrations 8, 9 and 15, pp. 464--66.

In McCourt, the plaintiff also was not a party to the suit wherein judgment was rendered. This fact was not found to be material. As for privity:

'While McCourt was not in privity with her insurer Northwestern in the strict sense of that term, nevertheless there was a close relationship between them with respect to the negligence issues in the federal court. Any potential liability of Northwestern was wholly derived from McCourt and based upon her conduct. Algiers asserted his claim against Northwestern because Northwestern was her insurer, and founded the claim on the premises that she had been negligent. In defending against the claims of Rude and Algiers, Northwestern was in a sense representing McCourt. With respect to the negligence issues it stood in her shoes.' Id. at 611, 91 N.W.2d at 196.

The Restatement describes various occasions when one not a party to the preceding judgment may be found a privy and be thus bound by it. As in McCourt, Mrs. Hernke was one who participated in the preceding action in the sense that her liability was in issue. She did in fact testify as a witness and was the subject of a special verdict question. Section 84 of the Restatement stresses that a participator is in privity if the person shares in the control of the action and has a proprietary or financial interest in the judgment or in the determination of a question of law or fact related to the same subject; this privity also binds the successive opponent who has notice of the control. Appellants cite the absence of control, and presumably the absence of notice if control existed, as removing Mrs. Hernke from the category of one in privity who may assert res judicata.

Before attention is directed to Mrs. Hernke, it must be noted that Mr. Hernke, a successful plaintiff in the county court, is a party plaintiff in the circuit court on his own cause of action. He is seeking recovery of his damages through direct expenditures in the medical treatment of his wife and through the indirect loss of her services, just as he sought recovery in the county court for his damage through injury to his automobile. All of his bases of recovery are premised on the negligence of Eichler and Mrs. Hernke in the operation of their vehicles, which has been conclusively determined between him and the appellants. See Northwestern National Casualty Co. v. State Automobile & Casualty Underwriters (1967), 35 Wis.2d 237, 244--45, 151 N.W.2d 104.

Although the plaintiff in McCourt was found to have a close tie with a party of the preceding action, the decision was clearly not premised upon the Restatement element of control for privity. McCourt is in fact a departure from the Restatement view.

Rejection of the control test has been found when privity is asserted, for certain purpose, between a husband and wife. This is so when they are involved in separate suits arising out of a personal injury to one of them. Privity is found mainly for the derivative claims a spouse has, Bitsos v. Red Owl Stores, Inc. (S.D.S.D.1972), 350 F.Supp. 850; Houghton v. Novak (1973), 9 Ill.App.3d 699, 292 N.E.2d 905.

In the case at bar, we hold that...